New Zealand Law Society - Lawyers Complaints Service: Fee deductions was unsatisfactory conduct

Lawyers Complaints Service: Fee deductions was unsatisfactory conduct

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A lawyer, B, who deducted fees from funds properly due to an estate has been found guilty of unsatisfactory conduct.

In [2015] NZLCDT 26, the lawyer faced three charges at a hearing of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal.

A man died in March 2003. He was survived by his widow, two children of that marriage and by a number of children of former marriages.

The man’s estate consisted of a modest home in his sole name. The man’s will left the widow as a life tenant of the home.

After her death the home was to be transferred to the two children of the marriage, contingent upon them attaining 24 years of age. The will provided for specific legacies to some of the deceased’s children and then directed that the residue be divided between the widow, her children and some of her stepchildren in unequal shares.

Guardian Trust was appointed executor. It immediately became clear to Guardian Trust that administration of the estate would not be straightforward. There was little or no money to meet the executorship charges and ongoing management fees regarding the life tenancy. Guardian Trust initiated correspondence and discussion about renouncing its right to probate and administration of the will and eventually did so.

The widow consulted B very soon after the death of her husband. She received advice about her life tenancy and about making a claim to the estate. B engaged in correspondence with Guardian Trust about possible options for administration of the estate if it renounced its executorship.

Term deposit

The widow advised B that the deceased had at the time of his death a term deposit of $45,000 in his sole name.

The first charge B faced related to the fact that he had failed to correct statements he had made to Guardian Trust relating to the low value of the estate once he became aware there was a bank account in the deceased’s name with substantial funds in it.

B maintained that the information about the bank account was confidential and that professionally he was not bound to disclose it to anyone in accordance with a signed directive he had from his client.

“The Tribunal accepts, as did [B], that a barrister and solicitor may not mislead a third party such as the Guardian Trust even if it is the client’s instruction to do so,” the Tribunal decision states.

The Tribunal noted that the statements in B’s correspondence were correct at the time they were written and that “there was no evidence before us that Guardian Trust corresponded with or attempted to engage further with the practitioner before renouncing its executorship”.


The Tribunal said it accepted that B had a professional obligation to his client to keep confidential the existence of the bank account when he was directed in writing by his client to do so.

“Maintaining client confidentiality is a cornerstone of the profession. Having regards to the facts of this case, the Tribunal is not required to consider further the issue of when obligations of non disclosure may be overridden.” The Tribunal accordingly dismissed that charge.

In the second charge, the lawyers standards committee alleged that B had misled the bank when requesting that the funds from the deceased’s term deposit be paid into his trust account.

The standards committee argued that the documents B provided the bank misrepresented the reality that the widow was only one of the beneficiaries and that she had no formal role in administering the estate.

B’s response was that there had been no misrepresentation on his part and his letters made it clear that:

  • the widow was the beneficiary he represented;
  • his client was only one of the estate’s beneficiaries;
  • the widow was not the executor/administrator of the estate; and
  • the widow was claiming only the legal and equitable ownership of the funds which form part of the estate.

The Tribunal said it reached the conclusion that the documents were neither misleading nor deceptive and dismissed the second charge.

The third charge related to B deducting fees owed to him by the widow from funds due to the estate before forwarding those funds to the nominated trust account of a new solicitor instructed by the widow.

Deducted costs

B deducted his costs of $10,009.56 owed to him by the widow personally, together with a sum representing tax deducted from the interest earned on the funds held in the trust account before he transferred the remainder of the funds as directed.

The Tribunal said it found that B’s conduct in respect of the third charge was unsatisfactory.

B applied for non publication of his name and of any details that would lead to identification of the estate and his client, and the Tribunal made such an order.

The Tribunal also ordered B to pay the Law Society $10,000 standards committee costs and $7,077 Tribunal costs.

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